RISK MANAGEMENT STRATEGIES ADOPTED BY BROILER FARMERS IN NSIT UBIUM LOCAL GOVERNMENT AREA OF AKWA IBOM STATE.

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1 RISK MANAGEMENT STRATEGIES ADOPTED BY BROILER FARMERS IN NSIT UBIUM LOCAL GOVERNMENT AREA OF AKWA IBOM STATE. Obinaju, L. C. and Johnson, E. I. Department of Agricultural Economics and Extension, Faculty of Agriculture, University of Uyo, Akwa Ibom State, Nigeria. Corresponding author s obinajulawrence@gmail.com Phone: ABSTRACT The study focused on the risk management strategies adopted by broiler farmers in Nsit Ubium Local Government Area of Akwa Ibom State in Nigeria. A simple random sampling procedure was used to draw the 120 respondents from the two clans in the area at 60 per class for the study. Data was collected with the aid of a well-structured questionnaire. Descriptive statistics was used to summarise data. Data generated was also ranked while the factors affecting broiler output was determined using a linear regression model. The results showed that disease, input price fluctuation, low access to credit and poor infrastructure were the major risks faced by broiler farmers in the study area Risk was found to affect broiler output in the study area. The study therefore recommended that extension agents should be adequately equipped to provide farmers with information necessary for effective risk management and also periodic training sessions and workshops should be organized to enlighten the farmers on modern risk management strategies. Keywords: Broiler enterprise, Risk management, Farmers, Production INTRODUCTION Agriculture, an industry that utilizes intensive methods to produce, process and market food and fuel also has a fair share of risk in its activities. Livestock and meat industry is an important sub sector of Nigeria. It provides sources of livelihood to many people and households (Ndanitsa, 2014). According to Nworgu (2007) the growth of this sector is still below the potentials of the country s resources due to various reasons such as, high cost of inputs, inadequate and dysfunctional infrastructural facilities, amongst others. Farmers on the other hand make decisions that affect farming operations, (Iheke and Igbelina 2016). These decisions are generally made under the environment of risk and uncertainties. Yield, product prices and to a more limited extent, input prices and quantities are usually not known with certainty when investment decisions are being made (Ayinde et al, 2008). This ultimately puts the farmer at risk in his production business. Risk is a phenomenon that has existed for a long period of time. Risk is a phenomenon observed in all endeavours of life and business, there is an element of risk in practically all activities undertaken by man either in his daily life or undertaking any project. Effiong et al (2014) defined risk as the uncertainty in business or project endeavors whose negative outcome could result in significant economic cost. Risk has posed a great hazard to most business establishments are everywhere and substantially unavoidable (Ayinde et al 2008). Nevertheless, the effects of risks can be reduced when appropriately managed. Risk management in agriculture is an essential tool for farmers and agribusiness owners to avoid and react to shock (OECD, 2011). Despite the oil boom, agriculture is still the major sector in the Nigerian economy and accounts for 35.2 % of the country s Gross Domestic Product (GDP) and must therefore play a key role in unleashing economic growth and reducing poverty (Heise et al, 2015). The broiler enterprise is a huge industry in Nigeria and has been described as the fastest means of bridging the protein deficiency gap prevailing in Nigeria, (Akpabio et al 2007). This industry is of utmost importance to the rural population in Nigeria, because it provides income in time of financial distress through quick sales of products and it also contributes to the household nutrition as many rural poor household rely on their poultry production to supply the majority of their animal source of protein and essential macronutrient (Ambibola et al, 2013). However, in spite of the seemingly impressive breakthroughs, the poultry industry is yet to witness a commensurate growth (Effiong et al, 2014). The growth of this industry has been hampered by the high level of risk faced by farmers especially those residing in the rural areas. Some examples of the risks faced by poultry producers, as enumerated, by (Iheke and Igbelina 2016) include climate variability, input price variability, technological change, theft, insecurity, incidence of diseases, equipment breakdown, high cost of veterinary services, change in government policy, borrowing money with sudden change in interest rates, scarcity of labour at peak times and change in health and well-being of the farmer. It is possible to a see a situation where all the birds are wiped out because of diseases leaving the farmer with great losses. The issue of risk has posed a significant problem in the broiler industry. The problem is becoming so severe that many of the poultry farms are folding up and prospective investors are becoming increasingly reluctant to invest due to the associated production risk and uncertainties (Abimbola et al 2013). The risk however does not only affect the farm enterprise but makes strong impact on the life and existence of the farmer that owns the farm and the entire nation in various forms- like scarcity of food and poverty (Adesanya 2010). It is therefore important to look at the risk management strategies adopted by broiler farmers in Nsit Ubium and to determine how it has helped in mitigating some of the risk faced by them in the enterprise. NJAFE VOL. 13 No. 4,

2 METHODOLOGY The study was conducted in Nsit Ubium Local Government Area of Akwa Ibom State. A simple random sampling procedure was used to select sixty (60) each from the two (2) clans in the Local Government Area resulting in a total sample size of one hundred and twenty (120) broiler farmers. Data used for this study was collected through the use of well- structured questionnaires. Different analytical methods such as frequency counts, percentages and ranks were used and the factors affecting output of the broiler industry was ascertained using the linear regression model and this was specified as follows: Y=b 1x 1+b 2x 2+b 3x 3+b 4x 4+b 5x 5+ b 6x 6+ b 7x 7+ b 8x 8+ b 9x 9+ b 10x 10 + e Where; Y= Output (Revenue from sales of mature broilers) X 1= Age (in years) X 2= Marital status ( married = 1, Not married = 0) X 3 =Sex (male =1; female = 0) X 4 = Educational level ( number of years of formal education) X 5 = Household size (number of persons) X 6 = Experience (number of years) X 7 = Farm size (in hectares) X 8 = Risk index ( ratio of number of risks faced by broiler farmers to the total risk in study area). X 9 = Labour cost (in Naira) X 10 = Feed cost (in Naira) e = Error term RESULTS AND DISCUSSION Socio-economic characteristics of the respondents Results in Table 1 on the socio-economic characteristics of broiler farmers showed that more men were involved in broiler farming, and the predominant age group of broiler farmers in the study area was years. This showed that the broiler farmers in Nsit Ubium Local Government Area were within the active labour force and therefore contributed substantially the broiler industry in the area. Majority (76.7 %) of the broiler farmers were married. The result implied that majority of the farm households were stable. According to Nwaru (2004), this stability should create conducive environments for good citizenship training, development of personal integrity and entrepreneurship, which are very important for efficient use of resources. The study showed that majority (55.0 %) of the broiler farmers were graduates and this was an advantage as they were able to make use of the available innovations to leverage on their production activities. This indicated that there was high literacy among farmers in the study area which can be attributed to the fact that broiler farming requires some form of technical knowledge which necessitates the acquisition of education (Abimbola et al, 2013). The farmers were well experienced (with an average of 13 years of experience) in broiler production and the average number of birds kept (246 birds) by these farmers indicated that most of them were involved in medium scale broiler production. Ibeagwa (2011) noted that the number of years of experience of the farmer may give an indication of practical knowledge by farmers to overcome certain inherent farm production challenges. Types of risk faced by the broiler farmers Table 2 shows the results on the types of risks faced by the broiler farmers in the study area. These risks were grouped into four technical risk, market risk, financial risk and social risk. Disease was identified as the most severe (96.6 %) technical risk faced by broiler farmers in the study area, while the most severe market and financial risks faced were input price fluctuation and low access to credit respectively. Although the spread of disease seems to be contained to a reasonable extent, there is need for more controlled measures as its impact on household consumption and the poultry industry in Nigeria has both economic and social cost (Onyeagocha et al, 2010). The major social risks identified by the respondents were poor infrastructure (86.0 %) and scarcity of labour (73.0 %), the latter attributed to the lack of engagement of youths in agriculture. Risk management strategies adopted by respondents in the study area Table 3 showed the result of the risk management strategies adopted by broiler farmers in the study area. From the results for financial risk management, it could be observed that majority of the farmers (79) used their off-farm income to solve immediate farm problems with very few (6) resorting to savings as a strategy for managing financial risks. The major strategies employed for the management of social, market and technical risks were: use of family labour (77), contract sales (74) and keeping of disease resistant birds (70). NJAFE VOL. 13 No. 4,

3 Table 1: Socio-economic characteristics of broiler farmers Characteristics Frequency Percentage Mean Gender Male Female Age Marital status Single Married Educational level No formal education Primary education Secondary education Tertiary education Household size Experience Flock size Income 10,000 50, , , , , , , , Access to extension agent Yes No Member of farmers association Yes No Primary occupation Farming Civil service Trading Others Source: Field Survey, 2017 Effect of risk on farmers broiler output in the study area The result of the linear regression to determine the effect of risk on broiler output is presented in the Table 4. The results showed that marital status, level of education and number of birds significantly affected broiler output in the area. This corroborates (Ali et al, 2013) who observed that comparatively larger broiler farm sizes could increase overall farm performance. Risk index was found to have a negative sign and was significant, which implies that as the level of risk increases the broiler output will reduce significantly. This corroborates Iheke and Igbelina (2016) who found risk to be statistically significant and inversely related to output. Years of farming experience was also a significant factor that affected broiler output in the study area. This result is also in agreement with the research findings of Ogoke (2009) who observed that the longer the years of experience, the more efficient the farmer becomes. NJAFE VOL. 13 No. 4,

4 Table 2: Types of risk faced by the broiler farmers Risk in the broiler business Frequency Percentage Ranking Technical risk Disease High mortality rate Weather Equipment breakdown Drought Flood Market risk Input price fluctuation Output price fluctuation Preference for foreign products Financial risk Low access to credit High cost of veterinary services High interest rate Social risk Poor infrastructure Scarcity of labour Change of governmental policy Technological change Farm theft Illness/death Ageing Source: Field survey, 2017 Table 3: Risk management strategies adopted by respondents in the study area Risk management strategies Frequency Percentage ranking Financial risk management Off farm income Informal borrowing Insurance Savings Social risk management Use of family labour Resting occasionally Provision of storage facilities Effective power supply Attending workshops Controlled access to visitors Proper record keeping Market risk management Contract sales Spread sales Purchase of inputs Enterprise diversification Purchase of feeds in bulk Technical risk management Keeping of disease resistant birds Proper management practice Use of foot dip at door Proper and timely vaccination Proper housing Proper fencing and netting Proper water and feed management Purchase of birds from reputable vendor Disinfecting the poultry house Source: Field Survey, 2017 NJAFE VOL. 13 No. 4,

5 Table 4: Effect of risk on farmers broiler output in the study area Variables Regression coefficients Standard error t - value Constant Age Sex Marital status ** Level of education *** Household size Number of birds *** Labour Feed cost ** Experience ** Risk index ** R square = R adjusted = F- Ratio = ** significance at 5%, *** significance at 1% Field Survey, CONCLUSION The study investigated the risk management strategies adopted by broiler farmers in Nsit Ubium Local Government Area of Akwa Ibom State in Nigeria. Results showed that although the broiler farmers face different kinds of risks, majority of them were able to adapt to those risk using the different management strategies presented. Risk was found to affect broiler output negatively in the study area. Since the farmers were highly literate, it is recommended that Government should periodically organize sensitization workshops and seminars on the current risks in the sector and intimate the farmers of the available strategies for combating such risk in order to boost the production of this sector. REFERENCES Abimbola, O., Adepoju, Omowumi, A. T. and Abayoli S. Oyekale Risk Coping Behavior of Small Scale Poultry Farmers in Ogun State, Nigeria, Asian Journal of Animal and veterinary Advances 8(6): Adesanya, E. O Agricultural Risk Management Strategies needed by Farmers in Western Agricultural Zone of Kogi State, Department of Vocational Teacher Education, University of Nigeria, Nsukka. Akpabio, I.A., Okon, D. P., Angba, A. O., and Aboh, C. l Avian Influenza Scare and Poultry Production in Uyo Urban, Nigeria, International Journal of Poultry Science 6: Ali, Y; Jahan, S; Islam, A; Islam, M. A Impact of socioeconomic factors on production performance of small scale and medium size broiler farming in Bangladesh. Journal of new sciences vol 18(1) Ayinde, E.O., Omotesto, A.O., and Adewumi, O M Risk Attitudes and Management Strategies of Small Scale Producers in Kwara State of Nigeria: A Ranking Approach, African Journal of Business Management 2(12): Effiong, E. O, Enyenihi, E. A and George, A. A Analysis of farming risk among small scale poultry farmers in Etim Ekpo Local Government Area of Akwa Ibom State, Nigeria. Nigerian Journal of Agriculture, Food and Environment 10(1) Heise, H; Crisan, A. and Theuvsen, I The Poultry Market in Nigeria; Market Structures and Potentials for Investment in the Market, International Food and Agribusiness Review vol. 18 Ibeagwa, O. B Effect of the Second National Fadama Project on the Income and Welfare of Farm Households in Imo State, Nigeria. Unpublished Master of Science thesis, Department of Agricultural Economics, Michael Okpara University of Agriculture, Umudike, Nigeria Iheke, O. R. and Igbelina C. A Risk Management in Poultry Production in Ikeredu Local Government Area of Imo State, Nigeria,National Journal of Agriculture, Food and Environment,12 (1)67-74 Ndanitsa, M. A.2014.Factor Price Analysis of Characteristics influencing cattle bread in Karra-Jebba Marlet in Niger State. Nigeria International Journal of Management, Information Technology and Engineering 4(7) Nwaru, J. C Rural Credit Markets and Resource Use in Arable Crop Production in Imo State of Nigeria. PhD Thesis Michael Okpara University of Agriculture, Umudike. Nworgu,F.C Economic Importance and Growth Rate of Broiler Chicks fed with Fluted Pumpkin (Telferia occidentalis) Leaves Extract African Journal of Biotechnology vol. 6(2) Ogoke C. M Agricultural insurance in present and future Agricultural Development in Niger State, Nigeria. Agricultural systems in Africa 5(2)45-50 NJAFE VOL. 13 No. 4,

6 Onyeagocha, S.U.O; Ehirim, N. C; Emenyonu, C. A; Oyemauwa, C. S; Nwosu, F. O. ; Ohajianga, D. O.; Eze, C. C.; Ayamu, G. A; Oguoma, N. N and Esonu, B. O.201. Post avian profitability and resource efficiency of broiler farmers in Akwa Ibom State south-south Nigeria, agricultural journal 5(2) 37-44, Organization for Economic Co-operation and Development 2011: Risk Management in Agriculture. What is the role of government? NJAFE VOL. 13 No. 4,